By Atu Ikot
Mr Henry Boyo is a very passionate man. Very unrelenting! He is one of Nigeria’s longest serving columnists that write on the economy. His area of interest is finance – money and markets. Given his passion and tenure on the beat, his views should ordinarily be taken seriously.
However, those who have followed his writings long enough see him as a totalitarian; a columnist who dismisses every public policy initiative conclusively, even if not convincingly. Though at home with the issues at stake, he seems to be more fixated with theories even when such are demonstrably impractical in certain circumstances.
In The Punch of Monday May 15, 2017, Mr Boyo started a two-part article on “Why the ERGP is bound to fail”. The concluding part was published on Monday, May 22, 2017. The column was also published in Vanguard of the same period. The focus of the write-up was on the feasibility of Nigeria’s Economic Recovery and Growth Plan (ERGP) released recently by the Federal Government. He was very emphatic on it being “bound to fail”.
He was of the view that the ERGP is not achievable because it is not different from previous Plans in terms of intent and purpose. To him, previous Plans like Vision 2010, NEEDS, and Vision 2020 had the same objective(s) of inclusive growth, job creation, improved infrastructure and social welfare, as well as achieving a diversified and competitive economy. Since these Plans failed to deliver on these objectives, then ERGP was similarly “bound to fail”.
According to him, all previous Plans failed because “they were in denial of the critical significance of best practice management of money supply in any economy”. To him, the objective of the ERGP cannot be achieved by “mere fiscal interventions” such as increasing the size of the annual budget. He felt that the 2017 budget size of over N7 trillion may be high in nominal terms, but smaller in real terms when compared to the budget size four years ago.
In view of this, he concluded that “the expectations that you would get improved economic performance from a simple expansion in the amount of money budgeted is obviously unfounded”.
He argued further that even if the whole of the 2017 Budget is spent on the country’s power infrastructure, it would amount to a drop in the ocean. In his view, while the sector requires over US$100 billion, the 2017 budget size amount to only about US$21 – US$22 billion.
Furthermore, he maintained that as long as inflation remains in the double digit and the exchange rate continues to slide, the economy will be static or recede in terms of real net value. In view of these, he concludes that “it is certainly a misplaced hope that our economy would ever grow with nominal rather than real increases in budget expenditure”
In terms of where the growth will come from, Mr. Boyo admitted that growth is best predicated on private sector enterprise, given the limitless amount of funds available in the sector for investment and growth. However, he contended that the sector cannot perform the expected role if it has no access to lower priced and loanable funds.
In summary, he was of the view that even if Government has designed the best of ERGP, but ignores the critical significance of monetary indices such as single digit rates of inflation, lower cost of funds, and a market determined exchange rate, the ERGP will be a mirage. But are these issues not captured in the ERGP?
It must be admitted that Mr Boyo has an idea of what he is talking about, but it seems he either did not read the entire document or deliberately refused to acknowledge that those issues were all noted and considered while putting the ERGP together; and that the Plan is a living document with provisions for adjustments where the fundamentals subsequently change. It is specifically indicated that the proposals in the Plan are based on certain economic fundamentals and projections therefrom, not on economic theories with Western orientation.
In terms of leveraging the power of the private sector to drive growth he agrees with the ERGP, even if not on a commendable note, as he hyped the concern about the high cost of loanable funds. This concern was also not lost on the authors of the Plan and fiscal authorities, as they have variously expressed such in recent times.
However, it could be said that his reasons for predicting the likely failure of the ERGP are not sufficiently grounded. For instance, it is fallacious and an over generalisation to argue that the ERGP would fail because previous Plans with similar intent failed. He apparently ignored provisions made for, and emphasis placed on effective implementation of the ERGP, such as the Delivery Unit as well as the merger of budget and planning functions in one ministry, provisions that were non-existent in the past.
He might be right that in real terms, the 2017 budget size could be lower than the size four years ago. However, his conclusion that the budget cannot impact meaningfully on the economy and therefore on achieving the objectives of the ERGP appears to be a misrepresentation of fact. Agreed, the ERGP will be funded primarily through the budget, as mentioned on page 128 of the Plan; however, Mr Boyo never considered the clear admission in the Plan that Federal Government resources are limited and as such additional resources (including external sources of funding and private sector financing options) will be explored to finance ERGP priorities.
Assuming that in real terms the budget size has remained constant in the past four years, he again ignored the fact that in relative terms, the 2017 Budget has higher provisions for capital spending than previous budgets. Assuming the provision is even smaller in real terms, it is trite knowledge that it is the efficiency of public spending that counts and not the size of the spending.
Regarding issues of inflation and exchange rates, the columnist seems to completely ignore that the first major execution priority of the ERGP is achieving macroeconomic stability; core elements of which include low inflation, stable (market reflective) exchange rates as well as full alignment of monetary and fiscal policies. Again, he failed to even acknowledge the modest efforts made by Government in these directions, as shown in the decline in inflation rates for four consecutive quarters and appreciation in exchange rate in recent times.
Though Mr Boyo is entitled to his opinion, entirely dismissing a project that has been subjected to rigorous debates and extensive consultation among a broad-based cadre of experts and relevant stakeholders the way he did, was just typical of his approach to public policy initiatives.
Boyo’s position is often predicated on “all things being equal” without consideration for peculiar intervening variables; but he knows that all things are seldom equal in an organic environment such as the one that human activities dominate.
One could hardly recall any government policy, whether a master-plan by the Federal government, monetary policy guidelines by the CBN or any economic policy initiative that has ever been agreeable to the columnist.Those who write with a clear mind point out shortcomings while appreciating modest efforts made. Dismissing everything, all the time, smacks of a mind-set.
Curiously, even his own prescriptions, when eventually considered by the authorities, still come under his attack for not being considered wholesale and as structurally conceived or even perceived by him.
The Plan may not be a perfect document, and no economic policy document has ever been, but at least the framers have kick-started a process that has been largely applauded, even by very critical international monetary and financial institutions.
While being mindful of the fact that majority is not always right, it holds empirically also that no one individual has monopoly of knowledge or can rightly assume to be correct on all subjects all the time.
Though it is acknowledged that most columnists are critics, it does no credit to the columnist’s integrity if he is associated with shooting down or entirely dismissing everything all the time.
Atu Ikot, a commentator on public affairs, lives in Lagos
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